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Over the past two decades Iraq has been affected by several waves of intense conflict and violence. The 2003 invasion of Iraq by a multinational coalition led by the United States and United Kingdom toppled the Ba’athist regime of Saddam Hussein. It also ushered in years of chaos and civil war, as a variety of armed groups vied for power and territory and targeted coalition forces and the fledgling post-Ba’athist Iraqi Army. A period of relative calm in the early 2010s was broken by the rise of the extremist Islamic State group, which occupied large parts of the country from 2014 until it was largely defeated by Iraqi forces with the support of a US-led international coalition in 2017.
Today Iraq is enjoying its most stable period since 2003. Armed violence persists in different forms, but it is sporadic, fragmented and localized. However, the country remains fragile and divided, and its people face an array of deepening challenges that the state is struggling to address. This Topical Backgrounder aims to provide a snapshot of the situation in Iraq 20 years since the invasion.
A fragile, oil-dependent economy
Crude oil exports accounted for an estimated 95 per cent of federal revenues in 2020. Successive governments have done little to wean Iraq off this heavy dependency on oil rents and diversify the economy. This has led to a bloated public sector characterized by patronage and to a shortage of jobs for new graduates—especially those without the necessary connections and networks.
The dependency on oil rents also exposes the Iraqi economy to fluctuations in global oil prices. Not only does this make long-term development planning difficult, but in 2020, when global oil prices plunged, the government was left unable to fund basic services or even pay public-sector salaries and pensions. Public debt reached 84 per cent of gross domestic product (GDP), and GDP itself fell 16 per cent, inflaming anger at the government. Although oil prices quickly recovered, two years of government paralysis and political turmoil have made it difficult for Iraq to take advantage and invest the increased revenues.
Despite having large natural gas reserves, Iraq currently relies on gas imports from Iran. The USA and Iraq’s European partners are keen to end this dependency and to help Iraq become energy-independent. However, the political and economic turmoil of the past few years in Iraq have stalled investment in capacity to separate and process gas from Iraqi oil fields, and instead vast quantities of gas associated with oil extraction are flared off. This leaves Iraq still dependent on Iranian gas and electricity imports, greatly increases its climate footprint and creates acute air pollution in parts of the country. The situation is a prime illustration of the complexity of Iraq’s security challenges and governance failures, which interact in complex ways with its oil-dependent economy, tumultuous regional dynamics and environmental issues.
The changing face of armed violence
Today, Islamic State is thought to be unable to recruit more members in Iraq and only an estimated 500 fighters are still active in the country. Major military operations against Islamic State have thus ended. In 2020, the US began reducing its military footprint in Iraq—which had risen sharply in response to the rise of Islamic State—and only around 2500 US military personnel remain in the country, at Iraq’s invitation, in an advisory role.
A key task as the threat from Islamic State dissipates is to deal with the Popular Mobilization Forces (an Iraqi state-sponsored umbrella organization comprising a number of predominantly Shia militias, some supported by Iran) as well as smaller militia groups linked to ethno-religious minorities in the country’s north that were formed in the name of community self-defence. One of the goals of successive Iraqi governments has been integrating these forces into the Iraqi security forces, but progress has been slow. Most of the militias are nominally under the Ministry of Defence. However, many seem to act independently of government and outside institutional jurisdiction. Some have been accused of human rights violations and abuses against civilians, particularly during the mass anti-government protests in 2019.
Another task, being urged by the USA and the anti-Islamic State coalition, is to improve how the Peshmerga—the armed forces of the Kurdistan Region of Iraq (KRI)—and the Iraqi Armed Forces interact. A lack of coordination and intelligence-sharing has undermined the efficiency of security operations, particularly in the disputed territories of Iraq. Prior to the emergence of Islamic State in 2014, the Kurdistan Regional Government (KRG) and the federal government in Baghdad were jointly administering security in these territories.
Iraq has also suffered from the spillover of civil conflicts and counterinsurgency in neighbouring countries, especially in some of its more remote regions. Iran and Türkiye have both launched missile strikes or armed incursions against opposition forces on Iraqi territory in recent years.
Identity politics and worsening state-society relations
The United States and other members of the coalition that invaded Iraq in 2003 and supported its transition to post-Ba’athist democracy lacked a long-term vision. They often failed to anticipate the consequences of major decisions, such as the disbanding of the Iraqi Army in 2003 or several initiatives put forward by the transitional authorities.
One of the most consequential of these initiatives was the establishment of Muhasasa Ta’ifia, a form of consociationalist elite bargain that was adopted after 2005. Under Muhasasa Ta’ifia, government posts, sinecures and departments are shared out among the Kurdish, Shia and Sunni political elites after an election—often after a lot of fraught inter-factional horse-trading. Voters are offered a choice of parties within a given ethnosectarian bloc, but no choice of policy platforms. There is no parliamentary opposition to hold the government accountable.
Muhasasa Ta’ifia was conceived as a way to stop Iraq fracturing and divisions along the major ethnosectarian faultlines, to encourage the groups to collaborate and to avoid one group becoming too dominant. While it has arguably succeeded to an extent in those aims, it has also given rise to ineffective governments, lack of accountability, and a public sector rife with corruption and patronage. As a result, a major new faultline has emerged, with ordinary citizens united across ethnosectarian lines by grievances against the governing class. Along with corruption, citizens complain of economic mismanagement, unemployment, crumbling infrastructure, weak public services and more. Largely youth-led anti-government protests in 2019 expressed their feelings of alienation from the political elite with the slogan ‘We want a homeland’.
Mass protest has been growing since 2015. The October Protest or Tishreen Movement that began in 2019 was large enough to topple the government of Prime Minister Adil Abdul-Mahdi in early 2020 and was violently suppressed by state forces and militias.
Muhasasa Ta'ifia caused another political crisis in 2021–22 when elites were unable to agree on a new government for over a year after a general election in October 2021. Voter turnout in that election fell to a record low of 44 per cent, illustrating the growing popular disillusionment and frustration with the political system.
Muhasasa Ta'ifia seems unlikely to change in the near term, but there are some signs that it is slowly breaking down, and perhaps even starting to make way for a more issue-based politics. For example, political factions have recently been forming alliances beyond their ethnosectarian blocs. Following the 2021 election, Muqtada al-Sadr, the leader of the Shia Sadrist movement, proposed forming a majority government with a sizeable parliamentary opposition—although this was rejected by other factions. More positively, the Tishreen Movement spawned its own political candidates, some of whom won seats. Their potential to influence federal politics is negligible, but they may be able to push forward change in subnational politics.
Climate change vulnerability and environmental challenges
Governance failures have also left Iraq increasingly vulnerable to climate change and water scarcity and an array of related challenges. The number of days with temperatures over 50°C is increasing, and droughts are becoming longer and more intense.
Northern Iraq has traditionally been the breadbasket for the rest of the country, in particular providing the wheat that goes into government’s public distribution system. However, 90 per cent of production in the region is rainfed, while irrigation infrastructure is old, damaged or in places non-existent. Farmers are increasingly abandoning their fields to move to the cities, joining the informal economy. This adds to pressure on public services and resources in those cities—which can create resentment between long-standing residents and new arrivals. It also means that Iraq is becoming reliant on grain imports at a time when global food and fertilizer prices are at record levels, in large part due to the war in Ukraine.
Successive governments have highlighted the role of climate change and upstream damming of the Tigris and Euphrates rivers by Iran and Türkiye in Iraq’s water scarcity issues. However, although both are significant factors, it has also perhaps been an attempt to distract from the governments’ failures to improve water management, rebuild water infrastructure and modernize the agricultural sector. Iraqi Prime Minister Mohammed Shia al-Sudani announced a new package of climate and biodiversity protection measures in March 2023. While the package’s goals are appropriate, what matters is its implementation. New Iraqi ministers and department heads have a habit of scrapping whatever their predecessors started and announcing their own grand new initiatives. As pointed out in a recent SIPRI policy report, this lack of continuity has been one the biggest obstacles to development and reform in Iraq.
The Kurdistan Region in federal Iraq
The Kurdistan Regional Government has a peaceful, if occasionally fraught, relationship with the federal government in Baghdad. The KRG enjoys a high level of autonomy, which includes maintaining its own military forces, the Peshmerga.
Early on in the transition process after 2003, Kurdistan was recognized as Iraq’s most stable region, and its leaders as having valuable experience of government that the other transitional authorities lacked. This was also partly due to the no-fly zone and other measures to protect the Iraqi Kurds from Iraqi government attacks implemented by the United States and European partners after the first Gulf War in 1991.
The Kurds in Iraq have largely distanced themselves from the Kurdish independence movements in neighbouring Iran, Syria and Turkey, to the extent that Peshmerga forces have even clashed with Turkey’s Kurdish Workers’ Party (PKK) forces operating on Iraqi soil.
Relations between the KRG and the federal government are complicated by long-standing disagreements over oil revenue sharing and control of the disputed territories, which include the oil-rich city of Kirkuk. The KRG brought these territories under its control after Iraqi security forces withdrew in the face of Islamic State advances in 2014. Resolving the status of the disputed territories should have taken place a decade earlier, according to the 2005 constitution.
When the major military operations to defeat Islamic State came to an end in 2017, tensions between the federal government and the KRG were intensified by the KRG’s push for greater autonomy. The KRG organized a referendum for independence that also included the disputed territories that were then under its control (including Kirkuk). The federal government rejected the referendum and retook the disputed territories with military force, supported by the Popular Mobilization Forces, and implemented other punitive measures against the KRG.
The KRG and state-society relations in the KRI have similar problems to those found at the federal level. The KRG budget relies heavily on independent oil exports and on budget transfers from Baghdad, removing the incentive to diversify the economy. And the two main Kurdish factions, the Kurdistan Democratic Party and the Patriotic Union of Kurdistan, have been in a power-sharing agreement since the unification of two Iraqi Kurdish enclaves in 2006. This agreement sees government and administrative posts shared between the two parties—an arrangement not dissimilar to Iraq’s Muhasasa Ta'ifia. As in the rest of Iraq, residents of the KRI complain of corruption, patronage and mismanagement by the Kurdish authorities. Many have left Iraq to seek asylum in Europe and elsewhere.
Relations with Iran and the USA
In the field of diplomacy, Iraq’s strongest relationships and ties are with Iran and the USA. Nevertheless, Iraq has sought to diversify its diplomatic and economic relations in recent years, including with Arab Gulf states as well as Egypt and Jordan.
Iran is Iraq’s largest trading partner, although Iraq’s imports from Iran—worth around $9 billion in 2018—vastly outweigh trade in the other direction. Iraq and Iran have also cooperated extensively in the fight against Islamic State. Iran’s influence in Iraq, much of it exercised through Shia political factions, has been a source of anger among protesters, especially as Iranian-backed militia groups have been involved in violence against anti-government protests.
In addition to having guided the post-invasion political transition, the USA remains Iraq’s main source of security support and of military and development aid. The USA has recently increased pressure on Iraq for tighter control of dollar sales in order to stamp out potential money laundering that benefits Iran and Syria. Steps taken to do this contributed to a significant drop in the dollar value of the Iraqi dinar, leading to soaring inflation in early 2023 and the replacement of the central bank governor.
Iraq has been caught in the middle of regional tensions, particularly due to its diplomatic and geographic closeness to Iran. In recent years Iraq has tried to take an active role in resolving these tensions. For example, with French support Iraq has organized two regional summits—one in Baghdad the other in Amman, Jordan—aimed at de-escalating regional tensions. In 2021 Iraq hosted talks between Iran and Saudi Arabia, a prelude to the China-brokered détente announced in March 2023.
The situation for Iraq’s minorities
State failure to protect Iraq’s many ethno-religious minorities is a long-standing problem. Since 2003, many minorities have been displaced due to insecurity, often migrating to the KRI—which was seen as calmer, safer and more tolerant—and in many cases out of Iraq altogether.
The Islamic State group targeted minorities, particularly those of non-Abrahamic faiths. The worst of this was in Nineveh Province, known for its mosaic of ethnic and religious diversity. The Islamic State attacks on the Yezidi group in Sinjar district were so devastating that they have been recognized as a genocide.
Many of the minorities who were displaced during the Islamic State occupation have not returned—partly down to the presence of the many militias still active in their areas of origin and a general sense of insecurity, but also because they feel they can make a better life in their new homes. A UN-brokered agreement between the KRG and the federal government in 2021 that was aimed at normalizing the security situation in Sinjar has had little effect on the ground that would encourage the internally displaced Yezidis to return.
Although minority citizens in Iraq are experiencing lower levels of armed violence based on their identity, discrimination against them seems to have worsened in the wake of the Islamic State occupation. SIPRI has been working in the Nineveh Plains region on ways to improve intercommunal relations and help minorities to re-establish their cultural practices and social relations.
Multiple civil society and grassroots groups are pushing for a reimagining of Iraq, where ethnicity and sect play a much smaller role. However, Iraq’s powerful political blocs are keen to maintain the current power-sharing arrangement, even though it does not seem likely to bring prosperity or lasting peace.
The legacy of the invasion still runs through many of the challenges that Iraq faces, but no longer defines them. Gradually, Iraq is shaping its own destiny—hopefully to the benefit of all its citizens.
Read more about SIPRI’s package of interviews, opinion pieces and reference materials to mark the 20th anniversary of the invasion of Iraq.
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